Down Round
Definition
A financing round in which a company raises capital at a lower valuation than its previous round. Down rounds signal reduced confidence in the company's prospects and typically trigger anti-dilution protections that further dilute founders and earlier investors.
Related Terms
Related FAQ
What is a cram down and why are they used in distressed financings?
A cram down forces existing shareholders to accept new investment terms (often at a punitive valuation) to fund operations, used when a company is out of capital and has few alternatives.
Read full answer →What is a down round and how does it affect founders?
A down round is a funding event where the company's valuation is lower than the previous round, signalling market concerns and potentially triggering anti-dilution consequences for founders.
Read full answer →What is a flat round and what does it signal?
A flat round closes at the same valuation as the previous round, signalling plateau in growth and often preceding a down round if growth doesn't accelerate.
Read full answer →Put this knowledge to work
Use Opagio's free tools to measure and grow the intangible assets that drive your business value.